Low cost private schools: any appetite?

Some of you may have come across the magazine that exists for those interested in investing in education. From time to time its journalists ring me up to ask about issues relating to the private sector in education As a business operator, albeit with TeachVac (www.teachvac.co.uk) using disruptive modern technology, I understand their need to assess opportunities and I happily share my thinking with them.

Recently, the magazine hosted a conference in London. Mostly, the topics discussed were in the higher education realm, an area of less direct interest to me at present than schools. However, there was a session about low cost private sectors schools and possible opportunities in England. Now that’s a topic of more direct interest to me, although they may not know that fact. Many years ago I undertook a piece of research for a client about the possible opportunities in the private school market for a low cost model at a time when school fees were rising sharply. My conclusion was that such a school might well struggle as it offered neither exclusivity nor the small classes that were both the trademarks of many private schools.

Has my judgement changed? Well, I haven’t done any in-depth analysis, so this is very much my first thoughts, but my hunch is that if anything the market is less propitious for new entrants than twenty years ago. With an expansion of selective state schools on the horizon, there may be opportunities in the primary sector, but less so in the secondary. Why pay for what you can achieve for nothing? Paying for tuition is also a cheaper option than paying for a school with some parts you won’t need.

Much could depend upon where the bar for entry to selective schools is set if the Conservative were to go down that path where they to be re-elected. Too selective and they will have little overall impact on existing comprehensive schools in most areas. Too low and we really have a return to the two-tier system of yesteryear. In that case, there might be an appetite in urban areas for fee-paying schools for those pupils that just missed out on a selective school, especially in a period of growth in pupil numbers. However, the existing fee-paying schools should be able to cope with that demand, especially if there were the transfer of some traditional entrants from these schools to the selective schools as parents feel they no longer have to shell out on school fees. You only have to look at what happens in areas with sixth form colleges with a high reputation and the distribution of fee-paying schools.

So, I think that I would be wary of thinking the future holds significant opportunities for the low-cost private school market. There might be some specific groups of parents still wanting to exit the state system but, while there is the chance of a free school paid for by the State, surely that would seem like a cheaper option for them.

Where I have always thought there might be a market is in the vocational skills area for the 14-18 age-group, especially if an institution is closely linked to the local job or apprenticeship markets. Even better, if you can persuade employers to subsidise the cost of the school in return for a fast track into the challenging sections of the labour market. The armed forces have historically understood this section of the market with their apprentice training colleges of yesteryear.

A school offering direct entry into the hospitality or travel industries, where the local further education college isn’t doing a good job, is one possibility. This section of the market also comes with less need for expensive building requirements associated with teaching the full range of curriculum subjects. So, find a niche that can be taught in traditional office type accommodation near a park or other outside space and in an urban area with good transport links and it might be worth creating a business plan; especially if the wages for lecturers can be low, but still better than when working as an experienced professional in the sector and you might have something worth taking further. But, there may well be some other opportunities in the education world for many investors.